Imposition of Special Measure against Banca Privada d'Andorra as a Financial Institution of Primary Money Laundering Concern, 13304-13309 [2015-05724]
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Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Proposed Rules
I. Statutory Provisions
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DEPARTMENT OF THE TREASURY
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FOR
PROTECTION
On October 26, 2001, the President
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Welding operation
Shielded metal-arc welding 3⁄16-,
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5⁄16-, 3⁄8-inch diameter electrodes ....
Atomic hydrogen welding .................
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Soldering ..........................................
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Light cutting, up to 1 inch ................
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Heavy cutting, over 6 inches ...........
Gas welding (light), up to 1⁄8-inch ....
Gas welding (medium), 1⁄8-inch to
1⁄2-inch.
Gas welding (heavy), over 1⁄2-inch ..
12.
14.
10–14.
14.
2.
3 or 4.
3 or 4.
4 or 5.
5 or 6.
4 or 5.
5 or 6.
6 or 8.
(2) Laser protection. (i) Employees
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TABLE E–2—SELECTING LASER
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Intensity, CW
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density
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10¥2 ........................
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Attenuation
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Attenuation
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105
106
107
108
5
6
7
8
Output levels falling between lines in
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(ii) All protective goggles shall bear a
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[FR Doc. 2015–05521 Filed 3–12–15; 8:45 am]
BILLING CODE 4510–26–P
RIN 1506–AB30
Imposition of Special Measure against
Banca Privada d’Andorra as a
Financial Institution of Primary Money
Laundering Concern
Financial Crimes Enforcement
Network (‘‘FinCEN’’), Treasury.
ACTION: Notice of proposed rulemaking.
AGENCY:
In a finding, notice of which
is published elsewhere in this issue of
the Federal Register (‘‘Notice of
Finding’’), the Director of FinCEN found
that Banca Privada d’Andorra (‘‘BPA’’)
is a financial institution operating
outside of the United States that is of
primary money laundering concern.
FinCEN is issuing this notice of
proposed rulemaking (‘‘NPRM’’) to
propose the imposition of a special
measure against BPA.
DATES: Written comments on this NPRM
must be submitted on or before May 12,
2015.
ADDRESSES: You may submit comments,
identified by 1506–AB30, by any of the
following methods:
• Federal E-rulemaking Portal:
https://www.regulations.gov. Follow the
instructions for submitting comments.
Include 1506–AB30 in the submission.
• Mail: The Financial Crimes
Enforcement Network, P.O. Box 39,
Vienna, VA 22183. Include 1506–AB30
in the body of the text. Please submit
comments by one method only.
• Comments submitted in response to
this NPRM will become a matter of
public record. Therefore, you should
submit only information that you wish
to make publicly available.
Inspection of comments: Public
comments received electronically or
through the U.S. Postal Service sent in
response to a notice and request for
comment will be made available for
public review on https://
www.regulations.gov. Comments
received may be physically inspected in
the FinCEN reading room located in
Vienna, Virginia. Reading room
appointments are available weekdays
(excluding holidays) between 10 a.m.
and 3 p.m., by calling the Disclosure
Officer at (703) 905–5034 (not a toll-free
call).
FOR FURTHER INFORMATION CONTACT: The
FinCEN Resource Center at (800) 767–
2825.
SUMMARY:
SUPPLEMENTARY INFORMATION:
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Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001 (the
‘‘USA PATRIOT Act’’), Public Law 107–
56. Title III of the USA PATRIOT Act
amends the anti-money laundering
provisions of the Bank Secrecy Act
(‘‘BSA’’), codified at 12 U.S.C. 1829b, 12
U.S.C. 1951–1959, and 31 U.S.C. 5311–
5314, 5316–5332, to promote the
prevention, detection, and prosecution
of international money laundering and
the financing of terrorism. Regulations
implementing the BSA appear at 31 CFR
Chapter X. The authority of the
Secretary of the Treasury (the
‘‘Secretary’’) to administer the BSA and
its implementing regulations has been
delegated to the Director of FinCEN.
Section 311 of the USA PATRIOT Act
(‘‘Section 311’’), codified at 31 U.S.C.
5318A, grants the Director of FinCEN
the authority, upon finding that
reasonable grounds exist for concluding
that a foreign jurisdiction, institution,
class of transaction, or type of account
is of ‘‘primary money laundering
concern,’’ to require domestic financial
institutions and financial agencies to
take certain ‘‘special measures’’ to
address the primary money laundering
concern.
II. Imposition of a Special Measure
Against BPA as a Financial Institution
of Primary Money Laundering Concern
A. Special Measure
As noticed elsewhere in this issue of
the Federal Register, on March 6, 2015,
the Director of FinCEN found that BPA
is a financial institution operating
outside the United States that is of
primary money laundering concern
(‘‘Finding’’). Based upon that Finding,
the Director of FinCEN is authorized to
impose one or more special measures.
Following the consideration of all
factors relevant to the Finding and to
selecting the special measure proposed
in this NPRM, the Director of FinCEN
proposes to impose the special measure
authorized by section 5318A(b)(5) (the
‘‘fifth special measure’’). In connection
with this action, FinCEN consulted with
representatives of the Federal functional
regulators, the Department of Justice,
and the Department of State, among
others.
B. Discussion of Section 311 Factors
In determining which special
measures to implement to address the
primary money laundering concern,
FinCEN considered the following
factors.
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1. Whether Similar Action Has Been or
Will Be Taken by Other Nations or
Multilateral Groups Against BPA
Other countries or multilateral groups
have not yet taken action similar to the
action proposed in this rulemaking that
would: (1) Prohibit domestic financial
institutions and agencies from opening
or maintaining a correspondent account
for or on behalf of BPA; and (2) require
certain covered financial institutions to
screen their correspondent accounts in
a manner that is reasonably designed to
guard against processing transactions
involving BPA. FinCEN encourages
other countries to take similar action
based on the information contained in
this NPRM and the Notice of Finding.
2. Whether the Imposition of the Fifth
Special Measure Would Create a
Significant Competitive Disadvantage,
Including Any Undue Cost or Burden
Associated With Compliance, for
Financial Institutions Organized or
Licensed in the United States
The fifth special measure proposed by
this rulemaking would prohibit covered
financial institutions from opening or
maintaining correspondent accounts for
or on behalf of BPA after the effective
date of the final rule implementing the
fifth special measure. Currently, only
four U.S. covered financial institutions
maintain an account for BPA; therefore,
FinCEN believes this action will not
present an undue regulatory burden. As
a corollary to this measure, covered
financial institutions also would be
required to take reasonable steps to
apply special due diligence, as set forth
below, to all of their correspondent
accounts to help ensure that no such
account is being used to provide
services to BPA. For direct
correspondent relationships, this would
involve a minimal burden in
transmitting a one-time notice to certain
foreign correspondent account holders
concerning the prohibition on
processing transactions involving BPA
through the U.S. correspondent account.
U.S. financial institutions generally
apply some level of screening and,
when required, conduct some level of
reporting of their transactions and
accounts, often through the use of
commercially-available software such as
that used for compliance with the
economic sanctions programs
administered by the Office of Foreign
Assets Control (‘‘OFAC’’) of the
Department of the Treasury and to
detect potential suspicious activity. To
ensure that U.S. financial institutions
are not being used unwittingly to
process payments for or on behalf of
BPA, directly or indirectly, some
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additional burden will be incurred by
U.S. financial institutions to be vigilant
in their suspicious activity monitoring
procedures. As explained in more detail
in the section-by-section analysis below,
financial institutions should be able to
leverage these current screening and
reporting procedures to detect
transactions involving BPA.
3. The Extent to Which the Proposed
Action or Timing of the Action Would
Have a Significant Adverse Systemic
Impact on the International Payment,
Clearance, and Settlement System, or on
Legitimate Business Activities of BPA
The requirements proposed in this
NPRM would target BPA specifically;
they would not target a class of financial
transactions (such as wire transfers) or
a particular jurisdiction. BPA is not a
major participant in the international
payment system and is not relied upon
by the international banking community
for clearance or settlement services.
Additionally, it is difficult to assess on
the information available the extent to
which BPA is used for legitimate
business purposes. BPA provides
services in private banking, personal
banking, and corporate banking. These
services include typical bank products
such as savings accounts, corporate
accounts, credit cards, and financing.
BPA provides services to high-risk
customers including international
foreign operated shell companies,
businesses likely engaged in unlicensed
money transmission, and senior foreign
political officials. Because of the
demonstrated cooperation of high level
management at BPA with TPMLs, BPA’s
legitimate business activity is at high
risk of being abused by money
launderers. Given this risk, FinCEN
believes that any impact on the
legitimate business activities of BPA is
outweighed by the need to protect the
US financial system. Moreover, the
imposition of the fifth special measure
against BPA would not have a
significant adverse systemic impact on
the international payment, clearance,
and settlement system.
4. The Effect of the Proposed Action on
United States National Security and
Foreign Policy
The exclusion of BPA from the U.S.
financial system as proposed in this
NPRM would enhance national security
by making it more difficult for money
launderers, transnational criminal
organizations, human traffickers, and
other criminals to access the U.S.
financial system. More generally, the
imposition of the fifth special measure
would complement the U.S.
Government’s worldwide efforts to
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expose and disrupt international money
laundering.
Therefore, pursuant to the Finding
that BPA is a financial institution
operating outside of the United States of
primary money laundering concern, and
after conducting the required
consultations and weighing the relevant
factors, the Director of FinCEN proposes
to impose the fifth special measure.
III. Section-by-Section Analysis for
Imposition of the Fifth Special Measure
A. 1010.662(a)—Definitions
1. Banca Privada d’Andorra
Section 1010.662(a)(1) of the
proposed rule would define BPA to
include all domestic and international
branches, offices, and subsidiaries of
BPA wherever located.
Covered financial institutions should
take commercially reasonable measures
to determine whether a customer is a
branch, office, or subsidiary of BPA.
2. Correspondent Account
Section 1010.662(a)(2) of the
proposed rule would define the term
‘‘correspondent account’’ by reference to
the definition contained in 31 CFR
1010.605(c)(1)(ii). Section
1010.605(c)(1)(ii) defines a
correspondent account to mean an
account established to receive deposits
from, or make payments or other
disbursements on behalf of, a foreign
bank, or to handle other financial
transactions related to the foreign bank.
Under this definition, ‘‘payable through
accounts’’ are a type of correspondent
account.
In the case of a U.S. depository
institution, this broad definition
includes most types of banking
relationships between a U.S. depository
institution and a foreign bank that are
established to provide regular services,
dealings, and other financial
transactions, including a demand
deposit, savings deposit, or other
transaction or asset account, and a
credit account or other extension of
credit. FinCEN is using the same
definition of ‘‘account’’ for purposes of
this rule as was established for
depository institutions in the final rule
implementing the provisions of section
312 of the USA PATRIOT Act requiring
enhanced due diligence for
correspondent accounts maintained for
certain foreign banks.1
In the case of securities brokerdealers, futures commission merchants,
introducing brokers-commodities, and
investment companies that are open-end
companies (‘‘mutual funds’’), FinCEN is
1 See
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also using the same definition of
‘‘account’’ for purposes of this rule as
was established for these entities in the
final rule implementing the provisions
of section 312 of the USA PATRIOT Act
requiring enhanced due diligence for
correspondent accounts maintained for
certain foreign banks.2
3. Covered Financial Institution
Section 1010.662(a)(3) of the
proposed rule would define ‘‘covered
financial institution’’ with the same
definition used in the final rule
implementing the provisions of section
312 of the USA PATRIOT Act,3 which
in general includes the following:
• An insured bank (as defined in
section 3(h) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(h));
• a commercial bank;
• an agency or branch of a foreign
bank in the United States;
• a Federally insured credit union;
• a savings association;
• a corporation acting under section
25A of the Federal Reserve Act (12
U.S.C. 611);
• a trust bank or trust company;
• a broker or dealer in securities;
• a futures commission merchant or
an introducing broker-commodities; and
• a mutual fund.
4. Subsidiary
Section 1010.662(a)(4) of the
proposed rule would define
‘‘subsidiary’’ as a company of which
more than 50 percent of the voting stock
or analogous equity interest is owned by
BPA.
B. 1010.662(b)—Prohibition on
Accounts and Due Diligence
Requirements for Covered Financial
Institutions
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1. Prohibition on Opening or
Maintaining Correspondent Accounts
Section 1010.662(b)(1) of the
proposed rule imposing the fifth special
measure would prohibit covered
financial institutions from establishing,
maintaining, administering, or
managing in the United States any
correspondent account for or on behalf
of BPA.
2. Special Due Diligence for
Correspondent Accounts To Prohibit
Use
As a corollary to the prohibition on
maintaining correspondent accounts for
or on behalf of BPA, section
1010.662(b)(2) of the proposed rule
would require a covered financial
institution to apply special due
2 See
3 See
31 CFR 1010.605(c)(2)(ii)–(iv).
31 CFR 1010.605(e)(1).
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diligence to all of its foreign
correspondent accounts that is
reasonably designed to guard against
processing transactions involving BPA.
As part of that special due diligence,
covered financial institutions must
notify those foreign correspondent
account holders that the covered
financial institutions know or have
reason to know provide services to BPA
that such correspondents may not
provide BPA with access to the
correspondent account maintained at
the covered financial institution.
Covered financial institutions should
implement appropriate risk-based
procedures to identify transactions
involving BPA.
A covered financial institution may
satisfy the notification requirement by
transmitting the following notice to its
foreign correspondent account holders
that it knows or has reason to know
provide services to BPA:
Notice: Pursuant to U.S. regulations issued
under Section 311 of the USA PATRIOT Act,
see 31 CFR 1010.662, we are prohibited from
establishing, maintaining, administering, or
managing a correspondent account for or on
behalf of Banca Privada d’Andorra. The
regulations also require us to notify you that
you may not provide Banca Privada
d’Andorra or any of its subsidiaries with
access to the correspondent account you hold
at our financial institution. If we become
aware that the correspondent account you
hold at our financial institution has
processed any transactions involving Banca
Privada d’Andorra or any of its subsidiaries,
we will be required to take appropriate steps
to prevent such access, including terminating
your account.
A covered financial institution may,
for example, have knowledge through
transaction screening software that a
correspondent processes transactions for
BPA. The purpose of the notice
requirement is to aid cooperation with
correspondent account holders in
preventing transactions involving BPA
from accessing the U.S. financial
system. However, FinCEN would not
require or expect a covered financial
institution to obtain a certification from
any of its correspondent account
holders that access will not be provided
to comply with this notice requirement.
Methods of compliance with the notice
requirement could include, for example,
transmitting a one-time notice by mail,
fax, or email. FinCEN specifically
solicits comments on the form and
scope of the notice that would be
required under the rule.
The special due diligence would also
include implementing risk-based
procedures designed to identify any use
of correspondent accounts to process
transactions involving BPA. A covered
financial institution would be expected
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to apply an appropriate screening
mechanism to identify a funds transfer
order that on its face listed BPA as the
financial institution of the originator or
beneficiary, or otherwise referenced
BPA in a manner detectable under the
financial institution’s normal screening
mechanisms. An appropriate screening
mechanism could be the mechanism
used by a covered financial institution
to comply with various legal
requirements, such as the commercially
available software programs used to
comply with the economic sanctions
programs administered by OFAC.
A covered financial institution would
also be required to implement riskbased procedures to identify indirect
use of its correspondent accounts,
including through methods used to
disguise the originator or originating
institution of a transaction. Specifically,
FinCEN is concerned that BPA may
attempt to disguise its transactions by
relying on types of payments and
accounts that would not explicitly
identify BPA as an involved party. A
financial institution may develop a
suspicion of such misuse based on other
information in its possession, patterns
of transactions, or any other method
available to it based on its existing
systems. Under the proposed rule, a
covered financial institution that
suspects or has reason to suspect use of
a correspondent account to process
transactions involving BPA must take
all appropriate steps to attempt to verify
and prevent such use, including a
notification to its correspondent account
holder requesting further information
regarding a transaction, requesting
corrective action to address the
perceived risk and, where necessary,
terminating the correspondent account.
A covered financial institution may reestablish an account closed under the
rule if it determines that the account
will not be used to process transactions
involving BPA. FinCEN specifically
solicits comments on the requirement
under the proposed rule that covered
financial institutions take reasonable
steps to prevent any processing of
transactions involving BPA.
3. Recordkeeping and Reporting
Section 1010.662(b)(3) of the
proposed rule would clarify that
paragraph (b) of the rule does not
impose any reporting requirement upon
any covered financial institution that is
not otherwise required by applicable
law or regulation. A covered financial
institution must, however, document its
compliance with the requirement that it
notify those correspondent account
holders that the covered financial
institution knows, or has reason to
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know, provide services to BPA, that
such correspondents may not process
any transaction involving BPA through
the correspondent account maintained
at the covered financial institution.
IV. Request for Comments
FinCEN invites comments on all
aspects of the proposal to impose the
fifth special measure against BPA and
specifically invites comments on the
following matters:
1. The impact of the proposed special
measure upon legitimate transactions
using BPA involving, in particular, U.S.
persons and entities; foreign persons,
entities, and governments; and
multilateral organizations doing
legitimate business.
2. The form and scope of the notice
to certain correspondent account
holders that would be required under
the rule;
3. The appropriate scope of the
proposed requirement for a covered
financial institution to take reasonable
steps to identify any use of its
correspondent accounts to process
transactions involving BPA; and
4. The appropriate steps a covered
financial institution should take once it
identifies use of one of its
correspondent accounts to process
transactions involving BPA.
V. Regulatory Flexibility Act
When an agency issues a rulemaking
proposal, the Regulatory Flexibility Act
(‘‘RFA’’) requires the agency to ‘‘prepare
and make available for public comment
an initial regulatory flexibility analysis’’
that will ‘‘describe the impact of the
proposed rule on small entities.’’ (5
U.S.C. 603(a)). Section 605 of the RFA
allows an agency to certify a rule, in lieu
of preparing an analysis, if the proposed
rulemaking is not expected to have a
significant economic impact on a
substantial number of small entities.
A. Proposal To Prohibit Covered
Financial Institutions From Opening or
Maintaining Correspondent Accounts
With Certain Foreign Banks Under the
Fifth Special Measure
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1. Estimate of the Number of Small
Entities to Whom the Proposed Fifth
Special Measure Will Apply
For purposes of the RFA, both banks
and credit unions are considered small
entities if they have less than
$500,000,000 in assets.4 Of the
estimated 7,000 banks, 80 percent have
4 Table of Small Business Size Standards
Matched to North American Industry Classification
System Codes, Small Business Administration Size
Standards (SBA Jan. 22, 2014) [hereinafter SBA Size
Standards].
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less than $500,000,000 in assets and are
considered small entities.5 Of the
estimated 7,000 credit unions, 94
percent have less than $500,000,000 in
assets.6
Broker-dealers are defined in 31 CFR
1010.100(h) as those broker-dealers
required to register with the Securities
and Exchange Commission (‘‘SEC’’).
Because FinCEN and the SEC regulate
substantially the same population, for
the purposes of the RFA, FinCEN relies
on the SEC’s definition of small
business as previously submitted to the
Small Business Administration
(‘‘SBA’’). The SEC has defined the term
‘‘small entity’’ to mean a broker or
dealer that: ‘‘(1) had total capital (net
worth plus subordinated liabilities) of
less than $500,000 on the date in the
prior fiscal year as of which its audited
financial statements, were prepared
pursuant to Rule 17a–5(d) or, if not
required to file such statements, a
broker or dealer that had total capital
(net worth plus subordinated debt) of
less than $500,000 on the last business
day of the preceding fiscal year (or in
the time that it has been in business if
shorter); and (2) is not affiliated with
any person (other than a natural person)
that is not a small business or small
organization as defined in this
release.’’ 7 Based on SEC estimates, 17
percent of broker-dealers are classified
as ‘‘small’’ entities for purposes of the
RFA.8
Futures commission merchants
(‘‘FCMs’’) are defined in 31 CFR
1010.100(x) as those FCMs that are
registered or required to be registered as
a FCM with the Commodity Futures
Trading Commission (‘‘CFTC’’) under
the Commodity Exchange Act (‘‘CEA’’),
except persons who register pursuant to
section 4f(a)(2) of the CEA, 7 U.S.C.
6f(a)(2). Because FinCEN and the CFTC
regulate substantially the same
population, for the purposes of the RFA,
FinCEN relies on the CFTC’s definition
of small business as previously
submitted to the SBA. In the CFTC’s
‘‘Policy Statement and Establishment of
Definitions of ‘Small Entities’ for
Purposes of the Regulatory Flexibility
Act,’’ the CFTC concluded that
registered FCMs should not be
considered to be small entities for
purposes of the RFA.9 The CFTC’s
determination in this regard was based,
in part, upon the obligation of registered
FCMs to meet the capital requirements
established by the CFTC.
For purposes of the RFA, an
introducing broker-commodities dealer
is considered small if it has less than
$35,500,000 in gross receipts
annually.10 Based on information
provided by the National Futures
Association (‘‘NFA’’), 95 percent of
introducing brokers-commodities
dealers have less than $35.5 million in
Adjusted Net Capital and are considered
to be small entities.
Mutual funds are defined in 31 CFR
1010.100(gg) as those investment
companies that are open-end investment
companies that are registered or are
required to register with the SEC.
Because FinCEN and the SEC regulate
substantially the same population, for
the purposes of the RFA, FinCEN relies
on the SEC’s definition of small
business as previously submitted to the
SBA. The SEC has defined the term
‘‘small entity’’ under the Investment
Company Act to mean ‘‘an investment
company that, together with other
investment companies in the same
group of related investment companies,
has net assets of $50 million or less as
of the end of its most recent fiscal
year.’’ 11 Based on SEC estimates, 7
percent of mutual funds are classified as
‘‘small entities’’ for purposes of the RFA
under this definition.12
As noted above, 80 percent of banks,
94 percent of credit unions, 17 percent
of broker-dealers, 95 percent of
introducing brokers-commodities, zero
FCMs, and 7 percent of mutual funds
are small entities. The limited number
of foreign banking institutions with
which BPA maintains or will maintain
accounts will likely limit the number of
affected covered financial institutions to
the largest U.S. banks, which actively
engage in international transactions.
Thus, the prohibition on maintaining
correspondent accounts for foreign
banking institutions that engage in
transactions involving BPA under the
fifth special measure would not impact
a substantial number of small entities.
5 Federal Deposit Insurance Corporation, Find an
Institution, https://www2.fdic.gov/idasp/main.asp;
select Size or Performance: Total Assets, type Equal
or less than $: ‘‘500000’’ and select Find.
6 National Credit Union Administration, Credit
Union Data, https://webapps.ncua.gov/customquery/
; select Search Fields: Total Assets, select Operator:
Less than or equal to, type Field Values:
‘‘500000000’’ and select Go.
7 17 CFR 240.0–10(c).
8 76 FR 37572, 37602 (June 27, 2011) (the SEC
estimates 871 small broker-dealers of the 5,063 total
registered broker-dealers).
2. Description of the Projected Reporting
and Recordkeeping Requirements of the
Fifth Special Measure
The proposed fifth special measure
would require covered financial
institutions to provide a notification
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9 47
FR 18618, 18619 (Apr. 30, 1982).
Size Standards at 28.
11 17 CFR 270.0–10.
12 78 FR 23637, 23658 (April 19, 2013).
10 SBA
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intended to aid cooperation from foreign
correspondent account holders in
preventing transactions involving BPA
from accessing the U.S. financial
system. FinCEN estimates that the
burden on institutions providing this
notice is one hour. Covered financial
institutions would also be required to
take reasonable measures to detect use
of their correspondent accounts to
process transactions involving BPA. All
U.S. persons, including U.S. financial
institutions, currently must exercise
some degree of due diligence to comply
with OFAC sanctions and suspicious
activity reporting requirements. The
tools used for such purposes, including
commercially available software used to
comply with the economic sanctions
programs administered by OFAC, can
easily be modified to identify
correspondent accounts with foreign
banks that involve BPA. Thus, the
special due diligence that would be
required by the imposition of the fifth
special measure—i.e., the one-time
transmittal of notice to certain
correspondent account holders, the
screening of transactions to identify any
use of correspondent accounts, and the
implementation of risk-based measures
to detect use of correspondent
accounts—would not impose a
significant additional economic burden
upon small U.S. financial institutions.
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B. Certification
For these reasons, FinCEN certifies
that the proposals contained in this
rulemaking would not have a significant
impact on a substantial number of small
businesses.
FinCEN invites comments from
members of the public who believe
there would be a significant economic
impact on small entities from the
imposition of the fifth special measure
regarding BPA.
VI. Paperwork Reduction Act
The collection of information
contained in this proposed rule is being
submitted to the Office of Management
and Budget for review in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)). Comments on
the collection of information should be
sent to the Desk Officer for the
Department of Treasury, Office of
Information and Regulatory Affairs,
Office of Management and Budget,
Paperwork Reduction Project (1506),
Washington, DC 20503 (or by email to
oira submission@omb.eop.gov) with a
copy to FinCEN by mail or email at the
addresses previously specified.
Comments should be submitted by one
method only. Comments on the
collection of information should be
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received by May 12, 2015. In accordance
with the requirements of the Paperwork
Reduction Act and its implementing
regulations, 5 CFR 1320, the following
information concerning the collection of
information as required by 31 CFR
1010.662 is presented to assist those
persons wishing to comment on the
information collection.
A. Proposed Information Collection
Under the Fifth Special Measure
The notification requirement in
section 1010.662(b)(2)(i) is intended to
aid cooperation from correspondent
account holders in denying BPA access
to the U.S. financial system. The
information required to be maintained
by section 1010.662(b)(3)(i) would be
used by federal agencies and certain
self-regulatory organizations to verify
compliance by covered financial
institutions with the provisions of 31
CFR 1010.662. The collection of
information would be mandatory.
Description of Affected Financial
Institutions: Banks, broker-dealers in
securities, futures commission
merchants and introducing brokerscommodities, and mutual funds.
Estimated Number of Affected
Financial Institutions: 5,000.
Estimated Average Annual Burden in
Hours Per Affected Financial
Institution: The estimated average
burden associated with the collection of
information in this proposed rule is one
hour per affected financial institution.
Estimated Total Annual Burden:
5,000 hours.
FinCEN specifically invites comments
on: (a) Whether the proposed collection
of information is necessary for the
proper performance of the mission of
FinCEN, including whether the
information would have practical
utility; (b) the accuracy of FinCEN’s
estimate of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information required to be
maintained; (d) ways to minimize the
burden of the required collection of
information, including through the use
of automated collection techniques or
other forms of information technology;
and (e) estimates of capital or start-up
costs and costs of operation,
maintenance, and purchase of services
to report the information.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a valid OMB control
number.
VII. Executive Order 12866
Executive Orders 12866 and 13563
direct agencies to assess costs and
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Sfmt 4702
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. It has been
determined that the proposed rule is not
a ‘‘significant regulatory action’’ for
purposes of Executive Order 12866.
List of Subjects in 31 CFR Part 1010
Administrative practice and
procedure, banks and banking, brokers,
counter-money laundering, counterterrorism, foreign banking.
Authority and Issuance
For the reasons set forth in the
preamble, part 1010, chapter X of title
31 of the Code of Federal Regulations,
is proposed to be amended as follows:
■ 1. The authority citation for part 1010
is revised to read as follows:
Authority: 12 U.S.C. 1829b and 1951–1959;
31 U.S.C. 5311–5314, 5316–5332 Title III,
secs. 311, 312, 313, 314, 319, 326, 352, Pub.
L. 107–56, 115 Stat. 307.
■
2. Add § 1010.662 to read as follows:
§ 1010.662 Special measures against
Banca Privada d’Andorra.
(a) Definitions. For purposes of this
section:
(1) Banca Privada d’Andorra means
all branches, offices, and subsidiaries of
Banca Privada d’Andorra wherever
located.
(2) Correspondent account has the
same meaning as provided in
§ 1010.605(c)(1)(ii).
(3) Covered financial institution has
the same meaning as provided in
§ 1010.605(e)(1).
(4) Subsidiary means a company of
which more than 50 percent of the
voting stock or analogous equity interest
is owned by another company.
(b) Prohibition on accounts and due
diligence requirements for covered
financial institutions—(1) Prohibition
on use of correspondent accounts. A
covered financial institution shall
terminate any correspondent account
that is established, maintained,
administered, or managed in the United
States for, or on behalf of, Banca Privada
d’Andorra.
(2) Special due diligence of
correspondent accounts to prohibit use.
(i) A covered financial institution shall
apply special due diligence to its foreign
correspondent accounts that is
reasonably designed to guard against
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their use to process transactions
involving Banca Privada d’Andorra. At
a minimum, that special due diligence
must include:
(A) Notifying those foreign
correspondent account holders that the
covered financial institution knows or
has reason to know provide services to
Banca Privada d’Andorra that such
correspondents may not provide Banca
Privada d’Andorra with access to the
correspondent account maintained at
the covered financial institution; and
(B) Taking reasonable steps to identify
any use of its foreign correspondent
accounts by Banca Privada d’Andorra,
to the extent that such use can be
determined from transactional records
maintained in the covered financial
institution’s normal course of business.
(ii) A covered financial institution
shall take a risk-based approach when
deciding what, if any, other due
diligence measures it reasonably must
adopt to guard against the use of its
foreign correspondent accounts to
process transactions involving Banca
Privada d’Andorra.
(iii) A covered financial institution
that obtains knowledge that a foreign
correspondent account may be being
used to process transactions involving
Banca Privada d’Andorra shall take all
appropriate steps to further investigate
and prevent such access, including the
notification of its correspondent account
holder under paragraph (b)(2)(i)(A) and,
where necessary, termination of the
correspondent account.
(3) Recordkeeping and reporting. (i) A
covered financial institution is required
to document its compliance with the
notice requirement set forth in
paragraph (b)(2)(i)(A) of this section.
(ii) Nothing in this paragraph (b) shall
require a covered financial institution to
report any information not otherwise
required to be reported by law or
regulation.
Dated: March 6, 2015.
Jennifer Shasky Calvery,
Financial Crimes Enforcement Network.
[FR Doc. 2015–05724 Filed 3–12–15; 8:45 am]
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13309
DEPARTMENT OF HOMELAND
SECURITY
Collins, Program Manager, Docket
Operations, telephone (202) 366–9826.
Coast Guard
SUPPLEMENTARY INFORMATION:
Table of Acronyms
33 CFR Part 165
[Docket Number USCG–2014–1044]
RIN 1625–AA00
Safety Zone; Shore (Belt) Parkway
Bridge Construction, Mill Basin;
Brooklyn, NY
Coast Guard, DHS.
Notice of proposed rulemaking.
AGENCY:
ACTION:
The Coast Guard proposes to
establish a safety zone on the navigable
waters of Mill Basin surrounding the
Belt Parkway Bridge. In response to a
planned Belt Parkway Bridge
construction project, this rule would
allow the Coast Guard to prohibit all
vessel traffic through the safety zone
during bridge replacement operations,
both planned and unforeseen, that could
pose an imminent hazard to persons and
vessels operating in the area. This rule
is necessary to provide for the safety of
life in the vicinity of the construction of
the Belt Parkway Bridge.
DATES: Comments and related material
must be received by the Coast Guard on
or before May 12, 2015.
Requests for public meetings must be
received by the Coast Guard on or before
April 3, 2015.
ADDRESSES: You may submit comments
identified by docket number using any
one of the following methods:
(1) Federal eRulemaking Portal:
https://www.regulations.gov.
(2) Fax: (202) 493–2251.
(3) Mail or Delivery: Docket
Management Facility (M–30), U.S.
Department of Transportation, West
Building Ground Floor, Room W12–140,
1200 New Jersey Avenue SE.,
Washington, DC 20590–0001. Deliveries
accepted between 9 a.m. and 5 p.m.,
Monday through Friday, except federal
holidays. The telephone number is
(202)366–9329.
See the ‘‘Public Participation and
Request for Comments’’ portion of the
SUPPLEMENTARY INFORMATION section
below for further instructions on
submitting comments. To avoid
duplication, please use only one of
these three methods.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this rule, contact
LT Hannah Eko, Coast Guard Sector
New York; telephone (718) 354–4114, or
email hannah.o.eko@uscg.mil. If you
have questions on viewing or submitting
material to the docket, call Cheryl
SUMMARY:
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Fmt 4702
Sfmt 4702
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of Proposed Rulemaking
A. Public Participation and Request for
Comments
We encourage you to participate in
this rulemaking by submitting
comments and related materials. All
comments received will be posted
without change to https://
www.regulations.gov and will include
any personal information you have
provided.
1. Submitting Comments
If you submit a comment, please
include the docket number for this
rulemaking, indicate the specific section
of this document to which each
comment applies, and provide a reason
for each suggestion or recommendation.
You may submit your comments and
material online at https://
www.regulations.gov, or by fax, mail, or
hand delivery, but please use only one
of these means. If you submit a
comment online, it will be considered
received by the Coast Guard when you
successfully transmit the comment. If
you fax, hand deliver, or mail your
comment, it will be considered as
having been received by the Coast
Guard when it is received at the Docket
Management Facility. We recommend
that you include your name and a
mailing address, an email address, or a
telephone number in the body of your
document so that we can contact you if
we have questions regarding your
submission.
To submit your comment online, go to
https://www.regulations.gov, type the
docket number [USCG–2014–1044] in
the ‘‘SEARCH’’ box and click
‘‘SEARCH.’’ Click on ‘‘Submit a
Comment’’ on the line associated with
this rulemaking.
If you submit your comments by mail
or hand delivery, submit them in an
unbound format, no larger than 81⁄2 by
11 inches, suitable for copying and
electronic filing. If you submit
comments by mail and would like to
know that they reached the Facility,
please enclose a stamped, self-addressed
postcard or envelope. We will consider
all comments and material received
during the comment period and may
change the rule based on your
comments.
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]]>Agencies
[Federal Register Volume 80, Number 49 (Friday, March 13, 2015)]
[Proposed Rules]
[Pages 13304-13309]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-05724]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 1010
RIN 1506-AB30
Imposition of Special Measure against Banca Privada d'Andorra as
a Financial Institution of Primary Money Laundering Concern
AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: In a finding, notice of which is published elsewhere in this
issue of the Federal Register (``Notice of Finding''), the Director of
FinCEN found that Banca Privada d'Andorra (``BPA'') is a financial
institution operating outside of the United States that is of primary
money laundering concern. FinCEN is issuing this notice of proposed
rulemaking (``NPRM'') to propose the imposition of a special measure
against BPA.
DATES: Written comments on this NPRM must be submitted on or before May
12, 2015.
ADDRESSES: You may submit comments, identified by 1506-AB30, by any of
the following methods:
Federal E-rulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. Include 1506-AB30 in
the submission.
Mail: The Financial Crimes Enforcement Network, P.O. Box
39, Vienna, VA 22183. Include 1506-AB30 in the body of the text. Please
submit comments by one method only.
Comments submitted in response to this NPRM will become a
matter of public record. Therefore, you should submit only information
that you wish to make publicly available.
Inspection of comments: Public comments received electronically or
through the U.S. Postal Service sent in response to a notice and
request for comment will be made available for public review on https://www.regulations.gov. Comments received may be physically inspected in
the FinCEN reading room located in Vienna, Virginia. Reading room
appointments are available weekdays (excluding holidays) between 10
a.m. and 3 p.m., by calling the Disclosure Officer at (703) 905-5034
(not a toll-free call).
FOR FURTHER INFORMATION CONTACT: The FinCEN Resource Center at (800)
767-2825.
SUPPLEMENTARY INFORMATION:
I. Statutory Provisions
On October 26, 2001, the President signed into law the Uniting and
Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (the ``USA PATRIOT Act''),
Public Law 107-56. Title III of the USA PATRIOT Act amends the anti-
money laundering provisions of the Bank Secrecy Act (``BSA''), codified
at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5314, 5316-
5332, to promote the prevention, detection, and prosecution of
international money laundering and the financing of terrorism.
Regulations implementing the BSA appear at 31 CFR Chapter X. The
authority of the Secretary of the Treasury (the ``Secretary'') to
administer the BSA and its implementing regulations has been delegated
to the Director of FinCEN.
Section 311 of the USA PATRIOT Act (``Section 311''), codified at
31 U.S.C. 5318A, grants the Director of FinCEN the authority, upon
finding that reasonable grounds exist for concluding that a foreign
jurisdiction, institution, class of transaction, or type of account is
of ``primary money laundering concern,'' to require domestic financial
institutions and financial agencies to take certain ``special
measures'' to address the primary money laundering concern.
II. Imposition of a Special Measure Against BPA as a Financial
Institution of Primary Money Laundering Concern
A. Special Measure
As noticed elsewhere in this issue of the Federal Register, on
March 6, 2015, the Director of FinCEN found that BPA is a financial
institution operating outside the United States that is of primary
money laundering concern (``Finding''). Based upon that Finding, the
Director of FinCEN is authorized to impose one or more special
measures. Following the consideration of all factors relevant to the
Finding and to selecting the special measure proposed in this NPRM, the
Director of FinCEN proposes to impose the special measure authorized by
section 5318A(b)(5) (the ``fifth special measure''). In connection with
this action, FinCEN consulted with representatives of the Federal
functional regulators, the Department of Justice, and the Department of
State, among others.
B. Discussion of Section 311 Factors
In determining which special measures to implement to address the
primary money laundering concern, FinCEN considered the following
factors.
[[Page 13305]]
1. Whether Similar Action Has Been or Will Be Taken by Other Nations or
Multilateral Groups Against BPA
Other countries or multilateral groups have not yet taken action
similar to the action proposed in this rulemaking that would: (1)
Prohibit domestic financial institutions and agencies from opening or
maintaining a correspondent account for or on behalf of BPA; and (2)
require certain covered financial institutions to screen their
correspondent accounts in a manner that is reasonably designed to guard
against processing transactions involving BPA. FinCEN encourages other
countries to take similar action based on the information contained in
this NPRM and the Notice of Finding.
2. Whether the Imposition of the Fifth Special Measure Would Create a
Significant Competitive Disadvantage, Including Any Undue Cost or
Burden Associated With Compliance, for Financial Institutions Organized
or Licensed in the United States
The fifth special measure proposed by this rulemaking would
prohibit covered financial institutions from opening or maintaining
correspondent accounts for or on behalf of BPA after the effective date
of the final rule implementing the fifth special measure. Currently,
only four U.S. covered financial institutions maintain an account for
BPA; therefore, FinCEN believes this action will not present an undue
regulatory burden. As a corollary to this measure, covered financial
institutions also would be required to take reasonable steps to apply
special due diligence, as set forth below, to all of their
correspondent accounts to help ensure that no such account is being
used to provide services to BPA. For direct correspondent
relationships, this would involve a minimal burden in transmitting a
one-time notice to certain foreign correspondent account holders
concerning the prohibition on processing transactions involving BPA
through the U.S. correspondent account. U.S. financial institutions
generally apply some level of screening and, when required, conduct
some level of reporting of their transactions and accounts, often
through the use of commercially-available software such as that used
for compliance with the economic sanctions programs administered by the
Office of Foreign Assets Control (``OFAC'') of the Department of the
Treasury and to detect potential suspicious activity. To ensure that
U.S. financial institutions are not being used unwittingly to process
payments for or on behalf of BPA, directly or indirectly, some
additional burden will be incurred by U.S. financial institutions to be
vigilant in their suspicious activity monitoring procedures. As
explained in more detail in the section-by-section analysis below,
financial institutions should be able to leverage these current
screening and reporting procedures to detect transactions involving
BPA.
3. The Extent to Which the Proposed Action or Timing of the Action
Would Have a Significant Adverse Systemic Impact on the International
Payment, Clearance, and Settlement System, or on Legitimate Business
Activities of BPA
The requirements proposed in this NPRM would target BPA
specifically; they would not target a class of financial transactions
(such as wire transfers) or a particular jurisdiction. BPA is not a
major participant in the international payment system and is not relied
upon by the international banking community for clearance or settlement
services. Additionally, it is difficult to assess on the information
available the extent to which BPA is used for legitimate business
purposes. BPA provides services in private banking, personal banking,
and corporate banking. These services include typical bank products
such as savings accounts, corporate accounts, credit cards, and
financing. BPA provides services to high-risk customers including
international foreign operated shell companies, businesses likely
engaged in unlicensed money transmission, and senior foreign political
officials. Because of the demonstrated cooperation of high level
management at BPA with TPMLs, BPA's legitimate business activity is at
high risk of being abused by money launderers. Given this risk, FinCEN
believes that any impact on the legitimate business activities of BPA
is outweighed by the need to protect the US financial system. Moreover,
the imposition of the fifth special measure against BPA would not have
a significant adverse systemic impact on the international payment,
clearance, and settlement system.
4. The Effect of the Proposed Action on United States National Security
and Foreign Policy
The exclusion of BPA from the U.S. financial system as proposed in
this NPRM would enhance national security by making it more difficult
for money launderers, transnational criminal organizations, human
traffickers, and other criminals to access the U.S. financial system.
More generally, the imposition of the fifth special measure would
complement the U.S. Government's worldwide efforts to expose and
disrupt international money laundering.
Therefore, pursuant to the Finding that BPA is a financial
institution operating outside of the United States of primary money
laundering concern, and after conducting the required consultations and
weighing the relevant factors, the Director of FinCEN proposes to
impose the fifth special measure.
III. Section-by-Section Analysis for Imposition of the Fifth Special
Measure
A. 1010.662(a)--Definitions
1. Banca Privada d'Andorra
Section 1010.662(a)(1) of the proposed rule would define BPA to
include all domestic and international branches, offices, and
subsidiaries of BPA wherever located.
Covered financial institutions should take commercially reasonable
measures to determine whether a customer is a branch, office, or
subsidiary of BPA.
2. Correspondent Account
Section 1010.662(a)(2) of the proposed rule would define the term
``correspondent account'' by reference to the definition contained in
31 CFR 1010.605(c)(1)(ii). Section 1010.605(c)(1)(ii) defines a
correspondent account to mean an account established to receive
deposits from, or make payments or other disbursements on behalf of, a
foreign bank, or to handle other financial transactions related to the
foreign bank. Under this definition, ``payable through accounts'' are a
type of correspondent account.
In the case of a U.S. depository institution, this broad definition
includes most types of banking relationships between a U.S. depository
institution and a foreign bank that are established to provide regular
services, dealings, and other financial transactions, including a
demand deposit, savings deposit, or other transaction or asset account,
and a credit account or other extension of credit. FinCEN is using the
same definition of ``account'' for purposes of this rule as was
established for depository institutions in the final rule implementing
the provisions of section 312 of the USA PATRIOT Act requiring enhanced
due diligence for correspondent accounts maintained for certain foreign
banks.\1\
---------------------------------------------------------------------------
\1\ See 31 CFR 1010.605(c)(2)(i).
---------------------------------------------------------------------------
In the case of securities broker-dealers, futures commission
merchants, introducing brokers-commodities, and investment companies
that are open-end companies (``mutual funds''), FinCEN is
[[Page 13306]]
also using the same definition of ``account'' for purposes of this rule
as was established for these entities in the final rule implementing
the provisions of section 312 of the USA PATRIOT Act requiring enhanced
due diligence for correspondent accounts maintained for certain foreign
banks.\2\
---------------------------------------------------------------------------
\2\ See 31 CFR 1010.605(c)(2)(ii)-(iv).
---------------------------------------------------------------------------
3. Covered Financial Institution
Section 1010.662(a)(3) of the proposed rule would define ``covered
financial institution'' with the same definition used in the final rule
implementing the provisions of section 312 of the USA PATRIOT Act,\3\
which in general includes the following:
---------------------------------------------------------------------------
\3\ See 31 CFR 1010.605(e)(1).
---------------------------------------------------------------------------
An insured bank (as defined in section 3(h) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(h));
a commercial bank;
an agency or branch of a foreign bank in the United
States;
a Federally insured credit union;
a savings association;
a corporation acting under section 25A of the Federal
Reserve Act (12 U.S.C. 611);
a trust bank or trust company;
a broker or dealer in securities;
a futures commission merchant or an introducing broker-
commodities; and
a mutual fund.
4. Subsidiary
Section 1010.662(a)(4) of the proposed rule would define
``subsidiary'' as a company of which more than 50 percent of the voting
stock or analogous equity interest is owned by BPA.
B. 1010.662(b)--Prohibition on Accounts and Due Diligence Requirements
for Covered Financial Institutions
1. Prohibition on Opening or Maintaining Correspondent Accounts
Section 1010.662(b)(1) of the proposed rule imposing the fifth
special measure would prohibit covered financial institutions from
establishing, maintaining, administering, or managing in the United
States any correspondent account for or on behalf of BPA.
2. Special Due Diligence for Correspondent Accounts To Prohibit Use
As a corollary to the prohibition on maintaining correspondent
accounts for or on behalf of BPA, section 1010.662(b)(2) of the
proposed rule would require a covered financial institution to apply
special due diligence to all of its foreign correspondent accounts that
is reasonably designed to guard against processing transactions
involving BPA. As part of that special due diligence, covered financial
institutions must notify those foreign correspondent account holders
that the covered financial institutions know or have reason to know
provide services to BPA that such correspondents may not provide BPA
with access to the correspondent account maintained at the covered
financial institution. Covered financial institutions should implement
appropriate risk-based procedures to identify transactions involving
BPA.
A covered financial institution may satisfy the notification
requirement by transmitting the following notice to its foreign
correspondent account holders that it knows or has reason to know
provide services to BPA:
Notice: Pursuant to U.S. regulations issued under Section 311 of
the USA PATRIOT Act, see 31 CFR 1010.662, we are prohibited from
establishing, maintaining, administering, or managing a
correspondent account for or on behalf of Banca Privada d'Andorra.
The regulations also require us to notify you that you may not
provide Banca Privada d'Andorra or any of its subsidiaries with
access to the correspondent account you hold at our financial
institution. If we become aware that the correspondent account you
hold at our financial institution has processed any transactions
involving Banca Privada d'Andorra or any of its subsidiaries, we
will be required to take appropriate steps to prevent such access,
including terminating your account.
A covered financial institution may, for example, have knowledge
through transaction screening software that a correspondent processes
transactions for BPA. The purpose of the notice requirement is to aid
cooperation with correspondent account holders in preventing
transactions involving BPA from accessing the U.S. financial system.
However, FinCEN would not require or expect a covered financial
institution to obtain a certification from any of its correspondent
account holders that access will not be provided to comply with this
notice requirement. Methods of compliance with the notice requirement
could include, for example, transmitting a one-time notice by mail,
fax, or email. FinCEN specifically solicits comments on the form and
scope of the notice that would be required under the rule.
The special due diligence would also include implementing risk-
based procedures designed to identify any use of correspondent accounts
to process transactions involving BPA. A covered financial institution
would be expected to apply an appropriate screening mechanism to
identify a funds transfer order that on its face listed BPA as the
financial institution of the originator or beneficiary, or otherwise
referenced BPA in a manner detectable under the financial institution's
normal screening mechanisms. An appropriate screening mechanism could
be the mechanism used by a covered financial institution to comply with
various legal requirements, such as the commercially available software
programs used to comply with the economic sanctions programs
administered by OFAC.
A covered financial institution would also be required to implement
risk-based procedures to identify indirect use of its correspondent
accounts, including through methods used to disguise the originator or
originating institution of a transaction. Specifically, FinCEN is
concerned that BPA may attempt to disguise its transactions by relying
on types of payments and accounts that would not explicitly identify
BPA as an involved party. A financial institution may develop a
suspicion of such misuse based on other information in its possession,
patterns of transactions, or any other method available to it based on
its existing systems. Under the proposed rule, a covered financial
institution that suspects or has reason to suspect use of a
correspondent account to process transactions involving BPA must take
all appropriate steps to attempt to verify and prevent such use,
including a notification to its correspondent account holder requesting
further information regarding a transaction, requesting corrective
action to address the perceived risk and, where necessary, terminating
the correspondent account. A covered financial institution may re-
establish an account closed under the rule if it determines that the
account will not be used to process transactions involving BPA. FinCEN
specifically solicits comments on the requirement under the proposed
rule that covered financial institutions take reasonable steps to
prevent any processing of transactions involving BPA.
3. Recordkeeping and Reporting
Section 1010.662(b)(3) of the proposed rule would clarify that
paragraph (b) of the rule does not impose any reporting requirement
upon any covered financial institution that is not otherwise required
by applicable law or regulation. A covered financial institution must,
however, document its compliance with the requirement that it notify
those correspondent account holders that the covered financial
institution knows, or has reason to
[[Page 13307]]
know, provide services to BPA, that such correspondents may not process
any transaction involving BPA through the correspondent account
maintained at the covered financial institution.
IV. Request for Comments
FinCEN invites comments on all aspects of the proposal to impose
the fifth special measure against BPA and specifically invites comments
on the following matters:
1. The impact of the proposed special measure upon legitimate
transactions using BPA involving, in particular, U.S. persons and
entities; foreign persons, entities, and governments; and multilateral
organizations doing legitimate business.
2. The form and scope of the notice to certain correspondent
account holders that would be required under the rule;
3. The appropriate scope of the proposed requirement for a covered
financial institution to take reasonable steps to identify any use of
its correspondent accounts to process transactions involving BPA; and
4. The appropriate steps a covered financial institution should
take once it identifies use of one of its correspondent accounts to
process transactions involving BPA.
V. Regulatory Flexibility Act
When an agency issues a rulemaking proposal, the Regulatory
Flexibility Act (``RFA'') requires the agency to ``prepare and make
available for public comment an initial regulatory flexibility
analysis'' that will ``describe the impact of the proposed rule on
small entities.'' (5 U.S.C. 603(a)). Section 605 of the RFA allows an
agency to certify a rule, in lieu of preparing an analysis, if the
proposed rulemaking is not expected to have a significant economic
impact on a substantial number of small entities.
A. Proposal To Prohibit Covered Financial Institutions From Opening or
Maintaining Correspondent Accounts With Certain Foreign Banks Under the
Fifth Special Measure
1. Estimate of the Number of Small Entities to Whom the Proposed Fifth
Special Measure Will Apply
For purposes of the RFA, both banks and credit unions are
considered small entities if they have less than $500,000,000 in
assets.\4\ Of the estimated 7,000 banks, 80 percent have less than
$500,000,000 in assets and are considered small entities.\5\ Of the
estimated 7,000 credit unions, 94 percent have less than $500,000,000
in assets.\6\
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\4\ Table of Small Business Size Standards Matched to North
American Industry Classification System Codes, Small Business
Administration Size Standards (SBA Jan. 22, 2014) [hereinafter SBA
Size Standards].
\5\ Federal Deposit Insurance Corporation, Find an Institution,
https://www2.fdic.gov/idasp/main.asp; select Size or Performance:
Total Assets, type Equal or less than $: ``500000'' and select Find.
\6\ National Credit Union Administration, Credit Union Data,
https://webapps.ncua.gov/customquery/; select Search Fields: Total
Assets, select Operator: Less than or equal to, type Field Values:
``500000000'' and select Go.
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Broker-dealers are defined in 31 CFR 1010.100(h) as those broker-
dealers required to register with the Securities and Exchange
Commission (``SEC''). Because FinCEN and the SEC regulate substantially
the same population, for the purposes of the RFA, FinCEN relies on the
SEC's definition of small business as previously submitted to the Small
Business Administration (``SBA''). The SEC has defined the term ``small
entity'' to mean a broker or dealer that: ``(1) had total capital (net
worth plus subordinated liabilities) of less than $500,000 on the date
in the prior fiscal year as of which its audited financial statements,
were prepared pursuant to Rule 17a-5(d) or, if not required to file
such statements, a broker or dealer that had total capital (net worth
plus subordinated debt) of less than $500,000 on the last business day
of the preceding fiscal year (or in the time that it has been in
business if shorter); and (2) is not affiliated with any person (other
than a natural person) that is not a small business or small
organization as defined in this release.'' \7\ Based on SEC estimates,
17 percent of broker-dealers are classified as ``small'' entities for
purposes of the RFA.\8\
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\7\ 17 CFR 240.0-10(c).
\8\ 76 FR 37572, 37602 (June 27, 2011) (the SEC estimates 871
small broker-dealers of the 5,063 total registered broker-dealers).
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Futures commission merchants (``FCMs'') are defined in 31 CFR
1010.100(x) as those FCMs that are registered or required to be
registered as a FCM with the Commodity Futures Trading Commission
(``CFTC'') under the Commodity Exchange Act (``CEA''), except persons
who register pursuant to section 4f(a)(2) of the CEA, 7 U.S.C.
6f(a)(2). Because FinCEN and the CFTC regulate substantially the same
population, for the purposes of the RFA, FinCEN relies on the CFTC's
definition of small business as previously submitted to the SBA. In the
CFTC's ``Policy Statement and Establishment of Definitions of `Small
Entities' for Purposes of the Regulatory Flexibility Act,'' the CFTC
concluded that registered FCMs should not be considered to be small
entities for purposes of the RFA.\9\ The CFTC's determination in this
regard was based, in part, upon the obligation of registered FCMs to
meet the capital requirements established by the CFTC.
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\9\ 47 FR 18618, 18619 (Apr. 30, 1982).
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For purposes of the RFA, an introducing broker-commodities dealer
is considered small if it has less than $35,500,000 in gross receipts
annually.\10\ Based on information provided by the National Futures
Association (``NFA''), 95 percent of introducing brokers-commodities
dealers have less than $35.5 million in Adjusted Net Capital and are
considered to be small entities.
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\10\ SBA Size Standards at 28.
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Mutual funds are defined in 31 CFR 1010.100(gg) as those investment
companies that are open-end investment companies that are registered or
are required to register with the SEC. Because FinCEN and the SEC
regulate substantially the same population, for the purposes of the
RFA, FinCEN relies on the SEC's definition of small business as
previously submitted to the SBA. The SEC has defined the term ``small
entity'' under the Investment Company Act to mean ``an investment
company that, together with other investment companies in the same
group of related investment companies, has net assets of $50 million or
less as of the end of its most recent fiscal year.'' \11\ Based on SEC
estimates, 7 percent of mutual funds are classified as ``small
entities'' for purposes of the RFA under this definition.\12\
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\11\ 17 CFR 270.0-10.
\12\ 78 FR 23637, 23658 (April 19, 2013).
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As noted above, 80 percent of banks, 94 percent of credit unions,
17 percent of broker-dealers, 95 percent of introducing brokers-
commodities, zero FCMs, and 7 percent of mutual funds are small
entities. The limited number of foreign banking institutions with which
BPA maintains or will maintain accounts will likely limit the number of
affected covered financial institutions to the largest U.S. banks,
which actively engage in international transactions. Thus, the
prohibition on maintaining correspondent accounts for foreign banking
institutions that engage in transactions involving BPA under the fifth
special measure would not impact a substantial number of small
entities.
2. Description of the Projected Reporting and Recordkeeping
Requirements of the Fifth Special Measure
The proposed fifth special measure would require covered financial
institutions to provide a notification
[[Page 13308]]
intended to aid cooperation from foreign correspondent account holders
in preventing transactions involving BPA from accessing the U.S.
financial system. FinCEN estimates that the burden on institutions
providing this notice is one hour. Covered financial institutions would
also be required to take reasonable measures to detect use of their
correspondent accounts to process transactions involving BPA. All U.S.
persons, including U.S. financial institutions, currently must exercise
some degree of due diligence to comply with OFAC sanctions and
suspicious activity reporting requirements. The tools used for such
purposes, including commercially available software used to comply with
the economic sanctions programs administered by OFAC, can easily be
modified to identify correspondent accounts with foreign banks that
involve BPA. Thus, the special due diligence that would be required by
the imposition of the fifth special measure--i.e., the one-time
transmittal of notice to certain correspondent account holders, the
screening of transactions to identify any use of correspondent
accounts, and the implementation of risk-based measures to detect use
of correspondent accounts--would not impose a significant additional
economic burden upon small U.S. financial institutions.
B. Certification
For these reasons, FinCEN certifies that the proposals contained in
this rulemaking would not have a significant impact on a substantial
number of small businesses.
FinCEN invites comments from members of the public who believe
there would be a significant economic impact on small entities from the
imposition of the fifth special measure regarding BPA.
VI. Paperwork Reduction Act
The collection of information contained in this proposed rule is
being submitted to the Office of Management and Budget for review in
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)). Comments on the collection of information should be sent to
the Desk Officer for the Department of Treasury, Office of Information
and Regulatory Affairs, Office of Management and Budget, Paperwork
Reduction Project (1506), Washington, DC 20503 (or by email to oira
submission@omb.eop.gov) with a copy to FinCEN by mail or email at the
addresses previously specified. Comments should be submitted by one
method only. Comments on the collection of information should be
received by May 12, 2015. In accordance with the requirements of the
Paperwork Reduction Act and its implementing regulations, 5 CFR 1320,
the following information concerning the collection of information as
required by 31 CFR 1010.662 is presented to assist those persons
wishing to comment on the information collection.
A. Proposed Information Collection Under the Fifth Special Measure
The notification requirement in section 1010.662(b)(2)(i) is
intended to aid cooperation from correspondent account holders in
denying BPA access to the U.S. financial system. The information
required to be maintained by section 1010.662(b)(3)(i) would be used by
federal agencies and certain self-regulatory organizations to verify
compliance by covered financial institutions with the provisions of 31
CFR 1010.662. The collection of information would be mandatory.
Description of Affected Financial Institutions: Banks, broker-
dealers in securities, futures commission merchants and introducing
brokers-commodities, and mutual funds.
Estimated Number of Affected Financial Institutions: 5,000.
Estimated Average Annual Burden in Hours Per Affected Financial
Institution: The estimated average burden associated with the
collection of information in this proposed rule is one hour per
affected financial institution.
Estimated Total Annual Burden: 5,000 hours.
FinCEN specifically invites comments on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the mission of FinCEN, including whether the information would have
practical utility; (b) the accuracy of FinCEN's estimate of the burden
of the proposed collection of information; (c) ways to enhance the
quality, utility, and clarity of the information required to be
maintained; (d) ways to minimize the burden of the required collection
of information, including through the use of automated collection
techniques or other forms of information technology; and (e) estimates
of capital or start-up costs and costs of operation, maintenance, and
purchase of services to report the information.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
OMB control number.
VII. Executive Order 12866
Executive Orders 12866 and 13563 direct agencies to assess costs
and benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). Executive Order 13563
emphasizes the importance of quantifying both costs and benefits, of
reducing costs, of harmonizing rules, and of promoting flexibility. It
has been determined that the proposed rule is not a ``significant
regulatory action'' for purposes of Executive Order 12866.
List of Subjects in 31 CFR Part 1010
Administrative practice and procedure, banks and banking, brokers,
counter-money laundering, counter-terrorism, foreign banking.
Authority and Issuance
For the reasons set forth in the preamble, part 1010, chapter X of
title 31 of the Code of Federal Regulations, is proposed to be amended
as follows:
0
1. The authority citation for part 1010 is revised to read as follows:
Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314,
5316-5332 Title III, secs. 311, 312, 313, 314, 319, 326, 352, Pub.
L. 107-56, 115 Stat. 307.
0
2. Add Sec. 1010.662 to read as follows:
Sec. 1010.662 Special measures against Banca Privada d'Andorra.
(a) Definitions. For purposes of this section:
(1) Banca Privada d'Andorra means all branches, offices, and
subsidiaries of Banca Privada d'Andorra wherever located.
(2) Correspondent account has the same meaning as provided in Sec.
1010.605(c)(1)(ii).
(3) Covered financial institution has the same meaning as provided
in Sec. 1010.605(e)(1).
(4) Subsidiary means a company of which more than 50 percent of the
voting stock or analogous equity interest is owned by another company.
(b) Prohibition on accounts and due diligence requirements for
covered financial institutions--(1) Prohibition on use of correspondent
accounts. A covered financial institution shall terminate any
correspondent account that is established, maintained, administered, or
managed in the United States for, or on behalf of, Banca Privada
d'Andorra.
(2) Special due diligence of correspondent accounts to prohibit
use. (i) A covered financial institution shall apply special due
diligence to its foreign correspondent accounts that is reasonably
designed to guard against
[[Page 13309]]
their use to process transactions involving Banca Privada d'Andorra. At
a minimum, that special due diligence must include:
(A) Notifying those foreign correspondent account holders that the
covered financial institution knows or has reason to know provide
services to Banca Privada d'Andorra that such correspondents may not
provide Banca Privada d'Andorra with access to the correspondent
account maintained at the covered financial institution; and
(B) Taking reasonable steps to identify any use of its foreign
correspondent accounts by Banca Privada d'Andorra, to the extent that
such use can be determined from transactional records maintained in the
covered financial institution's normal course of business.
(ii) A covered financial institution shall take a risk-based
approach when deciding what, if any, other due diligence measures it
reasonably must adopt to guard against the use of its foreign
correspondent accounts to process transactions involving Banca Privada
d'Andorra.
(iii) A covered financial institution that obtains knowledge that a
foreign correspondent account may be being used to process transactions
involving Banca Privada d'Andorra shall take all appropriate steps to
further investigate and prevent such access, including the notification
of its correspondent account holder under paragraph (b)(2)(i)(A) and,
where necessary, termination of the correspondent account.
(3) Recordkeeping and reporting. (i) A covered financial
institution is required to document its compliance with the notice
requirement set forth in paragraph (b)(2)(i)(A) of this section.
(ii) Nothing in this paragraph (b) shall require a covered
financial institution to report any information not otherwise required
to be reported by law or regulation.
Dated: March 6, 2015.
Jennifer Shasky Calvery,
Financial Crimes Enforcement Network.
[FR Doc. 2015-05724 Filed 3-12-15; 8:45 am]
BILLING CODE 4810-2-P
